Public hearing on SB 93 focuses on tax carve-outs for bank interest on rural loans

Senate Committee on Finance and Revenue Chair Senator Mark Meek called a public hearing on Senate Bill 93 on March 17, 2025. The bill would create a subtraction from state corporate income tax and exclude certain interest income from the corporate activity tax (CAT) for financial institutions that make loans secured by agricultural real estate, specified rural residences and coastal fishing vessels.

Why it matters: Sponsors and banking trade groups said the measure would lower borrowing costs for farmers, ranchers, coastal fishers and rural homeowners by removing state-level taxes on bank interest tied to those loans, making community banks more competitive with lenders that already receive favorable tax treatment.

Senator Mark Meek, chair of the Senate Committee on Finance and Revenue, described the bill as a targeted incentive for rural Oregon: "Oregon's agricultural industry is a cornerstone of our economy and our rural communities. . . Senate Bill 93 provides a targeted tax incentive to encourage financial institutions to offer lower interest loans for agricultural real estate, rural housing, and coastal fishing boats." The bill text as read in the hearing summary refers to loans for "agricultural real estate, commercial fishing boats, rural residences," and sets its tax-year applicability in the transcript as "tax years 2026 to 02/1931" (phrase unclear in the record).

Proponents: Scott Bruin, president and CEO of the Oregon Bankers Association, testified the measure—referred to by proponents as the state-level version of the "Access to Credit for Rural Economy (ACRE) Act"—would "sustain and grow rural Oregon by lowering the cost of credit for farmers and ranchers" and would not create a new government program or payment. Jeff Bailey, president and CEO of Bank of Eastern Oregon, said community banks are primary economic drivers in rural communities and warned they have lost loan customers to competitors who benefit from more favorable tax treatment: "We lost a loan relationship with a farmer ... He left us for a lower interest rate at the lender that enjoys more favorable tax treatment."

Opposition and technical concerns: Richard Swift of Tax Fairness Oregon urged rejection, arguing there is "no data that shows that providing a CAT tax break for lending institutions ... will drive the creation of more loans," and that the financial sector currently has strong profits so the tax break is unnecessary. Marcia Kelly of the Oregon Women's Rights Coalition said she signed up neutral but asked for guardrails on the bill's single-family residence language, noting that the bill as drafted could include very high‑value properties in small towns and recommending a cap tied to county assessed real market value. "I think that if you intend it to be commercial fishing boat, you should do an amendment to say that it's a commercial fishing boat," Kelly said, urging clearer definitions.

Stacy Michaelson of the Oregon School Boards Association said her group was "agnostic on the policy conversation" but emphasized that any CAT change should be revenue neutral for schools and that lawmakers should ensure the Student Success Act and other education funding would not be harmed by changes to the CAT.

What the bill would change and open questions: Testimony repeated key design elements—removing corporate excise and CAT taxation on specified interest income and limiting benefits to loans secured by defined property types—but the public record at the hearing did not include an enacted statutory citation or a finalized sunset/effective-date provision that could be read with certainty from the transcript (the tax‑year range was unclear in the recorded summary). Committee members and witnesses discussed possible technical amendments, including: (1) adding guardrails or loan-value caps for single‑family residences in small towns, (2) clarifying whether "coastal fishing boat" is intended to mean commercial vessels only, and (3) accounting for competitive differences between community banks and larger lenders.

Process and next steps: The committee took public testimony and did not take a vote during the hearing. Chair Meek closed the public hearing on SB 93 and moved on to other agenda items. Any formal amendments, fiscal estimates or committee votes will be documented in subsequent filings.

Votes at this hearing: none (public hearing only).